To increase sales, Whispering Winds Inc., a public company following IFRS, implemented a customer loyalty program that rewards a customer with 1 loyalty point for every $10 of purchases on a select group of products. Each point is redeemable for a $1 discount on any purchases of Whispering Winds merchandise in the next two years. Following the implementation of the program, during 2020, customers purchased select group products for $100,000 and earned 10,000 points redeemable for future purchases. (All products are sold to provide a 55% gross profit.) The stand-alone selling price of the purchased products is $100,000. Based on prior experience with incentive programs like this, Whispering Winds expects 9,500 points to be redeemed related to these sales. (Whispering Winds appropriately uses this experience to estimate the value of future consideration related to bonus points.)
1) Identify the separate performance obligation in the
Whispering Winds bonus point programs. (Round answers
to 0 decimal places, e.g. 5,125. Do not round intermediate
calculations.)
Products | $ | |
Bonus points |
$ |
2)
1) Loyalty point redemption is a separate performance obligation wherein the company will pass on the discount to customers against future purchases - 9,500 in this case.
2) Cash A/c Dr. 100000
To Revenue 90500
To Loyalty provision 9500
Cost of Goods sold 40725
To Inventory 40725
To increase sales, Whispering Winds Inc., a public company following IFRS, implemented a customer loyalty program...
To increase sales, Whispering Winds Inc., a public company following IFRS, implemented a customer loyalty program that rewards a customer with 1 loyalty point for every $10 of purchases on a select group of products. Each point is redeemable for a $1 discount on any purchases of Whispering Winds merchandise in the next two years. Following the implementation of the program, during 2020, customers purchased select group products for $100,000 and earned 10,000 points redeemable for future purchases. (All products...
To increase sales, Monty Inc., a public company following IFRS, implemented a customer loyalty program that rewards a customer with one loyalty point for every $30 of merchandise purchased. Each point is redeemable for a $2 discount on any purchases of Monty merchandise in the next three years. After the program launched, during 2020, customers bought merchandise for $330,000 (all products are sold to provide a 40% gross profit) and earned 11,000 points redeemable for future purchases. The stand-alone selling...
Larkspur Inc. has a customer loyalty program that rewards a customer with one customer loyalty point for every $100 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2020, customers purchase products for $294,000 (with a cost of $167,580) and earn 2,940 points redeemable for future purchases. Larkspur expects 2,450 points to be redeemed (based on its past experience, which is predictive of the amount of consideration to which it will be...
Problem 13-13 To increase the sales of its Sugar Kids breakfast cereal, Whispering Winds Foods Limited places one coupon in each cereal box. Five coupons are redeemable for a premium consisting of a child's hand puppet. In 2017, Whispering Winds purchases 41,400 puppets at $1.65 each and sells 489,000 boxes of Sugar Kids at $3.05 a box. Whispering Winds estimates that $0.20 of the sale price relates to the hand puppet to be awarded. From its experience with other similar...
On December 31, 2020, Whispering Winds Cabs Incorporated was granted 17 taxi licences by the City of Somerdale, at a cost of $1,620 per licence. It is probable that Whispering Winds Cabs will receive the expected future economic benefits of the taxi licences. There is an active market for taxi licences in Somerdale. (a) Prepare the journal entry to record the costs incurred. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no...
Question 3 Whispering Winds, Inc., a private company that applies ASPE, incurred $14,400 in materials and $12,700 in direct labour costs between January and March 2017 to develop a new product. In May 2017, the criteria required to capitalize development costs were met. A further $49,400 was spent for materials, $16,200 for direct labour costs, $3,100 for borrowing costs, and $66,100 for directly related legal fees. Prepare the appropriate journal entries. (Credit account titles are automatically indented when the amount...
Steig’s Sports Store has a customer loyalty program in which it issues points to customers for every cash purchase that can be applied to future purchases. For every dollar spent, a customer receives three points. Each point is worth one cent. There is no expiry date on the points. On December 31st, 2017, the store’s year end, Steig estimates 35% of the points issued will eventually be redeemed. What is the journal entry to record the end of year estimate...
Brief Exercise 5-4 Prepare the journal entries to record the following transactions on Whispering Winds Corp.'s books using a perpetual inventory system. On March 2, Whispering Winds Corp. sold $815,000 of merchandise on account to Martinez Company, terms 4/10, 1/30. The cost of the merchandise sold was $603,000. (Credl manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Account Titles and Explanation Debit Credit Accounts Receivable 815000 Sales Commissions Expense 815000...
Exercise 13-2 The following are selected 2017 transactions of Whispering Winds Corporation Purchased inventory from Orion Company on account for $42,900. Whispering Winds uses a periodic inventory system and records purchases using the gross method of accounting for purchase discounts. Issued a $42,900, 12-month, 8% note to Orion in payment of whispering winds's account. Borrowed $75,300 from the bank by signing a 12-month, non-interest-bearing $80,300 note. Sept. 1 Oct. 1 1 Prepare journal entries for the selected transactions above. (Credit...
Question 3 View Policies Current Attempt In Progress Whispering Winds Corp. is a growing company whose ability to raise capital has not been growing as quickly as its expanding assets and sales. Whispering Winds Corp's local banker has indicated that the company cannot increase its borrowing for the foreseeable future. Whispering Winds Corp's suppliers are demanding payment for goods acquired within 30 days of the invoice date, but Whispering Winds Cora's customers are slow in paying for their purchases (60-90...